Tucson CitizenTucson Citizen

City ponders new taxes, fee increases to balance budget

Citizen Staff Writer



Higher parks and recreation fees, higher bus fares, taxes on rental properties and gem show vendors buying temporary licenses are among the “revenue enhancements” Tucson officials have proposed in a report sent to the city manager Feb. 4.

The report, obtained by the Tucson Citizen through a public records request, examined ways the city can increase its tax and fee collections to cover its costs. It suggested that most fees be hitched to an index or cost-recovery formula to avoid financial handwringing whenever there is an economic downturn.

“Without intermittent fee increases, or a mechanism for incremental increases, the city will continue to find itself in situations during economic downturns when it is forced to cut entire services and programs,” the report states.

The report was written by the city’s Revenue Enhancement Team, which consists of staffers from the finance, transportation, legal and internal auditing departments.

The panel suggests returning to the city’s 1996 user-fee policy, which sets a percentage of the cost of a service that must be paid by the fee.

Seemingly small changes could mean significant revenue for the city, which is looking to save another $30 million next fiscal year (which starts July 1) to match expected revenues. Any new or reinstated taxes would likely take effect in July.

The City Council is scheduled to discuss City Manager Mike Hein’s proposals for closing the $30 million gap at its meeting Tuesday. They include $5 million in unspecified revenue enhancements.

The options on the table and the amounts they are expected to raise annually are:

• A 2 percent tax on residential rental real estate – $12 million.

• Raising residential trash and recycling fees by 4 percent – $986,000.

• A 25 percent increase in most bus fares – $1.8 million, with economy and express fares exempted. The basic fare would go from $1 to $1.25.

• Doubling the bed tax levied on hotels to $2 a night – $1.8 million.

• Utility tax increases on water, power and cable – $5 million

Officials also recommended that advertising, health spa memberships and tanning salons be taxed, that residential rental property owners be licensed and that builders be prevented from taking a cost-of-land deduction on their taxes.

City golf courses may also raise fees due to a $1.1 million bill they left the city’s general operating budget for the 2008 fiscal year, which ended June 30.

Twice in the past dozen years the City Council considered a proposal put together by a “revenue enhancement team.” Of the 10 suggestions made in 1997 and 2000, one was implemented: the much debated trash collection fee.

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